The DoT's Inspector General, Kenneth Mead (right), addressed the Senate's Subcommittee on Aviation, Committee on Commerce, Science and Transportation on Wednesday, with his assessment of the TSA's management and responsibility to the taxpayers, and his assessment wasn't complimentary. The TSA, he found, is a spending machine, with few effective controls on the money spigot.

For instance, he noted, "...one contract with initial cost estimates of $104 million grew to an estimated $700 million.  TSA must have the infrastructure to monitor and control its operating costs, especially given the large number and dollar volume of contracts it is managing, about $8.5 billion at the end of calendar year 2002 and continuing to grow."

Nobody cared how much it would cost.

Mead continued, "As we tracked TSA's progress in meeting the deadlines for the deployment of screeners and explosives detection equipment, we identified weaknesses in the controls over the interim contracts with screener companies, the contract for hiring the screener workforce, and the contract for deployment of explosives detection equipment."

A quick audit showed 1/5 of the money used in a questionable manner...

"The DCAA [Defense Contract Audit Agency] audited costs on the screener contracts and questioned over $124 million of almost $620 million audited. 

...or maybe it was half...

"A TSA review of an NCS Pearson subcontractor with $18 million in expenses, determined that between $6 million and $9 million of these expenses appear to be attributed to wasteful and abusive spending practices."

The Inspector General also warned of TSA's insatiable lust for power and control:

He wrote, "...it is important that the agency avoid extending itself beyond the basic tenets of the Act.s requirements.  For example, we previously testified that TSA needed to avoid mission creep. While the law is only explicit about a Federal law enforcement presence at checkpoints, TSA was considering expanding its law enforcement presence at the airports. TSA later abandoned these plans. However, TSA is now considering extending Federal Air Marshals. duties to conducting surveillance and patrolling at airports. The Federal Air Marshals were set up to guard flights. Before extending their mission, we hope TSA carefully considers the budgetary and staffing implications, and thoroughly vets this issue with airport authorities and Federal and local law enforcement agencies."

Suggestion: consider who's going to pay, and how much

With the industry already suffering huge losses, and with customers' staying away, the last thing that's needed for airlines, is a mandate from the TSA to charge even more. While "airlines" and "airports" are said to pay for so much of the TSA's heavy-handedness, the fact remains that "airlines" and "airports" are just different names for "the traveleing public." When "general funds" are mentioned, that's the traveling public, plus everybody who doesn't fly -- in other words, public subsidy of business fliers and vacationers.

Big dollars soon to be spent, to cover slapdash original implementation

"A major issue on the horizon is funding the next phase of EDS integration," he said. "Thus far, nearly all EDS equipment has been lobby-installed. TSA's planned next step (integrating the EDS equipment into airport baggage systems) is by far the most costly aspect of full implementation.  The task will not be to simply move the machines from lobbies to baggage handling facilities but will require major facility modifications."

Mead urged, "A key question is who will pay for those costs and how. The difference between TSA expenses and current aviation security revenues from taxes and airline fees cannot be covered by cost savings alone. The means for bridging this gap needs to be decided. To what extent it will be accomplished through the General Fund of the Treasury or aviation system users, which ultimately means passengers, airlines, and airports."

Crushing taxes already hurt, plenty.

Mead didn't think another TSA cost pass-through was the answer. He noted, "We urge great caution before adding additional fees or taxes for air travel. Consumers already pay a significant amount in aviation taxes and fees. For example, a $100 non-stop round trip ticket includes approximately $26 (26 percent) in taxes and fees. Put differently, the airlines receive approximately $74 and the government gets $26. A $200 single-connection round trip ticket includes approximately $51 (26 percent) in taxes and fees. Here the airline gets approximately $149 and the government gets $51. The current financial state of the airline industry will make it difficult for air carriers or their passengers to pay the billions of dollars required each year to cover TSA's expenses."

[Note that Mead is talking only about the taxes on the tickets themselves, and not the airlines' and airports' other taxes: Social Security, fuel, payroll, workman's comp, corporate income taxes, operating licenses, government-mandated insurance, insurance mandated by threat of government bureaucratic action (e.g., EPA, OSHA), and so on. In other words, Mead doesn't begin to touch the real cost of government; even so, his numbers are frightening --ed.]

Distribution of costs of the TSA's 'security' efforts is a matter for Congress; but Mead offered too many choices for funding: "...Congress will ultimately have to make a decision about how these costs will be paid for and the proper mix between airlines, airports, passengers, and the General Fund." In other words, will travelers pay, or will the taxpayers in general, be held up for the costs? [Much as ANN is predisposed toward making the burden on fliers as light as practical, is it fair to have the non-flying public pay for the costs of the flying public? --ed.]

...but TSA said it MET the deadline

Mead noted, the TSA's press releases notwithstanding, "Although TSA made every effort to meet the December 31st deadline to screen all checked baggage using explosives detection equipment, deployment of the equipment was not completed at all the Nation's commercial airports." Nobody thought it was possible; and only the TSA said it was done. That misleading claim, though, was good enough to keep federal prosecutors from throwing the book at negligent TSA officials.

Possible TSA fraud uncovered:

Mead made almost a footnote of some possibly criminal activity, when he said, "...Congress, in TSA's FY 2002 supplemental appropriation, provided a $738 million set-aside for 'physical modification of commercial service airports for the purpose of installing EDS and trace machines.'  There now appears to be some question as to whether the set-aside was spent for its intended purpose."

He gave the official explanation: "...the Airports Council International reported they had learned that $500 million of the $738 million was shifted to fund the Boeing contract." However, Mead made it clear that, "Boeing's contract does not include the purchase of explosives detection equipment, which will be funded separately by TSA." Nevertheless, he writes, "TSA agrees that $500 million of the $738 million was used to fund the Boeing contract and views using the $500 million toward Boeing's efforts as appropriate." Misappropriation, thus, is "appropriate" in the TSA world.

Plenty more areas for money to not be squandered:

Mead noted that most of the "heavy lifting" has yet to happen, and cited such diverse areas as finishing the EDS screening of baggage; cargo screening; airport infrastructure changes; curtailing TSA's extravagant recruiting costs, and many other areas. Overall, Congress got an earful, even though Mead, like all good politicians, cloaked the flagrant mismanagement, untrue statements, and possible fraudulent use of funds in silky rhetoric. Read the report yourself, at the link below.

FMI: www.oig.dot.gov/item_details.php?item=997